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Tax Tips for the end of financial year

Jennifer Palmer - May 2018

It’s that time of the year again! If you haven’t started tidying up your financial affairs before the end of the financial year, you’d better get cracking. Here are some tips to help you get started.

New Small Business Threshold now less than $10 million turnover are now eligible for

Instant asset write off for assets costing less than $20,000

Immediate tax deduction for all prepayments at 30 June 2018 that relate to a period of 12 months or less

Account for GST on a cash basis

Reduced Company Tax rate of 27.5%

Immediate tax deductions for eligible businesses start up expenses

Some FBT concessions

Superannuation

Pay all employee super before 30 June 2018, including June 2018 quarterly contributions. As tax deductions are only allowed when the payment is made, pay well before 30 June so you can claim it as a tax deduction in this financial year. Remember, all compulsory contributions are due no later than 28 days after the end of each quarter, but you only get a tax deduction when paid.

The cap for concessional super contributions is $25,000 for everyone regardless of age. This cap includes the 9.5% compulsory contributions as well as salary sacrifice contributions.

Employees can now claim a tax deduction for personal contributions up to the cap inclusive of employer contributions.

Investors and self-employed can claim a tax deduction on personal super contributions up to the cap.

Payments must be made to your fund no later than 30 June 2018. Don’t leave it until the last day, because if your fund receives it on 1 July, it will count towards next year’s contributions cap.

Make sure any contributions you make before end of financial year are within the contribution caps, so you don’t pay a penalty tax.

The limit for non-concessional contributions is now $100,000 per annum with the ability to bring forward two years contributions if you are under age 65 years. If you are aged between 65 and 75 years, you can only make a $100,000 per annum contribution if you satisfy the 'work test'.

The above is general information and you should seek advice before making super contributions.

Bad Debts

Write off any bad debts before 30 June 2018. This means going through your debtors list and either collecting payment, taking action or writing it off. Debts should be written off when there is no chance it will be recovered. The debtor must be removed from your accounts receivable list to be eligible for a deduction.

If you account for GST on an accruals basis, you can make a GST adjustment when debt is written off and claim back the amount of GST previously paid on the invoice.

Expenses

Do any spending you would need to do anyway, such as buying stationery, servicing vehicles, repairing equipment, printing, advertising and company uniforms and claim a tax deduction this year.

Pay for any business expenses in advance such as subscriptions and insurance if you are a small business.

If you are a property investor you are eligible for a tax deduction if you prepay expenses such as interest, strata levies and insurance.

Income

Document monies you have received for deposits on work yet to be completed as it’s not taxable this financial year. Record as income in advance.

Identify any invoices you have issued for sales that will take place next financial year, so the income and tax is deferred until then. Record as income in advance.

GST Adjustments

If you have receivables that are more than 12 months old and you report GST on an accruals basis, you can claim the GST back on your BAS, even though you have not written the debt off as bad.

If you have creditors that are more than 12 months old, you must repay the GST previously claimed.

Depreciation

Review your depreciation schedule and write off any obsolete or scrapped plant and equipment—you’ll receive a deduction for the written-down value.

Small Businesses are entitled to an immediate tax deduction for capital expenditure below $20,000.

For small business, assets that cost $20,000 or more will continue to be deducted over time using the small business pool. If the pool of assets is less than $20,000 at the end of the year, the full amount can be deducted.

Structure

It’s a good time to review the structure you’re working under, to make sure it’s the best option for asset protection and flexibility for the distribution of profits in the most tax-effective manner.

If you need some help with your tax planning before the end of financial year, we’d love to help. Contact us online or call 02 9526 1211.